Option Traders Eye Lower Lows for Eldorado Gold Corporation (EGO)

Mining concern Eldorado Gold Corp (USA) (NYSE:EGO) is swimming in red ink this afternoon, landing on the short-sale restricted list. With the shares down 21.4% at $4.38 -- and just off a six-year low of $4.29 -- bears are flooding the options pits. In fact, intraday put volume is running at eight times the average pace, with speculators betting on even lower lows for EGO.

Specifically, short-term traders are apparently buying to open the February 4 put, which will move into the money if EGO breaches $4 -- territory not charted since November 2008 -- by the close on Friday, Feb. 20, when front-month options expire. Less aggressive bears are buying to open the March and July 5-strike puts, gambling on EGO to extend its retreat south of $5 through the options' respective lifetimes.

Today's plunge was triggered by unfavorable comments from the newly empowered left-wing Greek government, after former-Communist-turned-Syriza-party-leader Panagiotis Lafazanis said the administration is "absolutely against" EGO's gold mine project in the country. However, even before today's drop, EGO option traders were bearishly tilted.

On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.12 stands higher than 73% of all other readings from the past year, reflecting a growing appetite for bearish bets over bullish. Likewise, Eldorado Gold Corp's (NYSE:EGO) Schaeffer's put/call open interest ratio (SOIR) of 0.45 registers in the 92nd percentile of its annual range, suggesting short-term traders are more put-heavy than usual.